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Do you trust trend lines only or will you look at other input?

Chart of STI index stock Yangzijiang Shipbuilding. YZJ has a very prominent triangle which hints bearish. Yet the stock has printed a new 52-week high. How will readers tackle conflicting signals like this?

Questions: Are trend lines important? Very. Are they useful? Yes. Do they fail? Yes. Do you analyse your charts based on trend lines or do you ignore them? Do you use them in conjunction with other technical studies? Please give feedback.

 

Question of trend for Yangzijiang Shipbldg

Yangzijiang Shipbuilding (BS6.SG) is a Chinese shipbuilder listed in Singapore. According to Sharesinv.com, the company is “Co is one of the largest non-state owned shipbuilder in China. [FY16 Turnover] Shipbuilding (69.7%), trading (21.5%), investments (7.1%), others (1.7%).”

It is a component stock of the Singapore Strait Times Index.

Some facts:

  • Highest traded price in 2016: $1.105
  • Lowest traded price in 2015: $0.705
  • Highest traded price YTD: $1.185
  • Lowest traded price YTD: $0.800
  • Stock price at moment: $1.165
  • Stock was worst performer among 30 Straits Times Index components in 2016.
  • Yangzijiang was down 25.91% for whole year at and of 2016.
  • It was also the best performer in Q1 2017, up 38.65%.

Worst performer in 2016. Best performer in Q1 2017. Prints new 52-week high, makes it candidate for potential higher gains this year. Resisted by very long trend line, candidate for loss.

Weak or strong? Is it turnaround story or a short story? This is what the chart shows.

Monthly chart of Yangzijiang Shipbuilding, 2007 - present

Monthly chart of Yangzijiang Shipbuilding, 2007 – present | Investing.com

Based on this chart, YZJ is either pullback/retracement story at/near a potential resistance or minus the input from these trend lines, is a bullish turnaround story with new 52-week highs pointing to more gains. Did I draw the trend lines correctly?

 

Trend line case study of Starhub

I want to show you a case study based on another component stock in the Straits Times Index.

Back in July 2015, I observed that Starhub (CC3.SG) another blue chip company, broke a decade long trend line signalling a potential down move. At that time Starhub was trading at $3.95.

Starhub monthly chart published on 07 July 2015

Starhub monthly chart published on 07 July 2015

 

February 2016 I published a followup which correctly described Starhub’s recovery at that time as a pullback into resistance. Starhub was then trading at 3.56.

Starhub weekly chart published on 18 February 2016

Starhub weekly chart published on 18 February 2016

Starhub is trading at 2.78 today. Starhub is an example of getting the trend right based on trend lines only; where the trend lines are very long and prominent. Anyone who followed the trend line’s signal back in mid-2015 would have made a lot of money.

 

More questions for Yangzijiang

Back to Yangzijiang, timing won’t be easy especially when I am using monthly and weekly charts here. On hindsight everything looks perfect. When you actually do a position, you have deal with ups and downs every do. There is no perfect technique to time your trade precisely.

Those trend lines on the YZJ chart span from 2008 to present. That’s 9 years coming to 10 at the end of this year. That is almost as long as the Starhub trend line. So my question again is would you consider Starhub as a buying or selling proposition. Would you consider the trend lines or not?

The correct answer leads to a pot of gold. I want to know.

 

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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